a Includes all consumer and government purchases of goods (e.g., vehicles and fuel) and services (e.g., auto insurance) and exports related to transportation. b Includes all other categories, such as entertainment, personal care products and services, and payments to pension plans. Source: U.S. Department of Transportation, Bureau of Transportation Statistics, calculated from data in U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Business, October 2001

Transcript of "Oakland Schools Economics Moodle, Unit 3, Lesson 3"

1.
Measuring Economic
Growth-GDP
Unit 3, Lesson 3

2.
Gross Domestic Product
(GDP)
Definition: The market
value of all final
goods and services
produced in a
country in a year
– Current/nominal GDP
(measured for the given year,
reflects inflation )
– Real GDP
(set on a constant base year)

7.
Net Exports
• Definition: Spending by
people outside the United
States on US produced
goods and services (exports,
or X) minus spending by
people in the United States
on foreign goods and service
(imports, or M)
– (X-M) = Net Exports
– (X) Jonas Brothers sell CDs
in Japan
– (M) You buy a camera
made in China

8.
Gross Domestic Product
How to Calculate
• GDP is calculated by multiplying
the quantity of each final good
and service produced (Q) in a
year by their estimated price (P)
to get the dollar value (DV), and
then adding all dollar values of
each to get the total GDP.
• GDP = C + G +I + (X-M)
Consumer Spending Q x P = DV
+
Investment Q x P = DV
+
Govt. Spend Q x P = DV
+
Net Exports (X- M)

10.
Gross Domestic Product
What’s Not Included
• The GDP includes only final
goods and services that have
been purchased for final use.
• Not Included
– Intermediate goods
• (battery comes with computer,
wood to make paper)
– Resale goods
• (used car, selling your home)
– Financial assets
• (stocks and bonds)
– Public or Private Transfer payments
• (unemployment and social
security, $ from parents)
– Non-market service
• (babysitting, painting your own
house)
– Underground economy
• (illegal transactions)

11.
An Alternative to GDP:
GPI - Genuine
Progress Indicator
• Developed in 1995
• Attempts to measure factors
not measured by GDP
• Adjusts for income
distribution
• Focuses on economic well-
being not monetary
transactions
• Adds for
– Increase in leisure and
vacation time
– volunteer and non-market work